* Euro rises vs dollar, yen, markets await Greek aid
* Markets heartened as Greece prepares more austerity steps
* Euro to remain vulnerable, contagion risks in focus
(Adds comment, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, April 30 (Reuters) - The euro edged up on Friday, extending slight gains against the dollar as expectations that Greece will soon receive debt assistance helped to quieten jitters about how Athens will pay off its hefty deficit.
Investors were heartened that negotiations on a multi-billion-euro aid package and avoid a Greek debt default should be completed in the coming days, while Athens prepares drastic austerity measures.
Earlier this week, concerns about Greece's escalating debt crisis and worries about credit risks in other vulnerable euro zone countries had pushed the euro to a one-year low against the dollar.
Analysts said a final announcement of the aid package would likely boost the euro, although the single currency would remain fragile as investors wait to see if Greece can make painful budget cuts to get its financial house in order.
"If the conditions of the aid are well received and the amount offered is sufficient, the euro could rise, but any gains will likely be short-lived," said Ulrich Leuchtmann, currency analyst at Commerzbank in Frankfurt.
"It will depend on whether Greece is able to make good on its promises to implement the terms."
By 0744 GMT, the euro had risen 0.6 percent to the day's high of $1.3306 according to Reuters data.
It further distanced itself from a fall to $1.3114 earlier in the week, its weakest since April 2009, but remains on track to post a 1.5 percent fall on the month as investors remain negative on the currency.
Against the yen, the euro rose 0.7 percent to 125.26 yen.
The dollar fell 0.3 percent against a currency basket to 81.747, as subsiding anxieties about Greece cooled some risk aversion and trimmed demand for the safe-haven dollar.
The dollar inched up 0.2 percent to 94.15 yen.
The Bank of Japan left rates unchanged at 0.10 percent on Friday, as widely expected.
In contrast, the Australian dollar rose 0.4 percent to $0.9305, boosted by mounting speculation that Australian interest rates may rise next week.
Investors awaited an advance reading of first-quarter U.S. economic growth due later in the day. Expectations are for 3.4 percent growth from the previous quarter, which would suggest the U.S. economy is recovering faster than the euro zone and Japan. (Editing by Mike Peacock)